Fed outsized rate cut draws muted reaction, but calm may not last

Published On Sep 19, 2024, 1:05 AM

The Federal Reserve's unexpected half-percentage-point rate cut led to a muted response in the markets, contrary to the volatility that investors had anticipated. Stocks fluctuated but ended mostly unchanged, with the S&P 500 reversing earlier gains and ending down 0.29%. Analysts suggest that this calm may be temporary, as they expect upcoming economic data to drive market reactions. There are concerns about rising bond yields and the implications of the Fed's actions signaling potential inflationary pressures. Small-cap stocks initially saw a boost but ultimately closed nearly flat, indicating investor hesitation and profit-taking. Overall, the market appears to be in a wait-and-see mode regarding future economic indicators.